One of the most common financial mistakes made by heads of households, couples, and married persons is not making a financial plan for themselves and for their families. Financial plans, when properly organized and implemented, have the ability to guide a family through economic ups and downs and can have a securing effect through time.
However, only thirty one percent of financial decision makers for families have created and implemented their own financial plan. So why are these numbers so low?
You Need Money to Plan Your Finances
Some have suggested that the reason many people are not planning for their financial future is because of the common myth that financial planning is only for those with money, or for those with so much money that they need to come up with a plan on how to manage it. But this myth could not be further from the truth.
Planning one’s finances and developing a strategy for finances can be done by individuals in all income brackets and, in fact, should be done more often by those in lower income brackets because studies have shown that one of the best ways to increase financial stability and move up in income brackets is to develop and implement a financial plan. So, then, the next question some may ask is what exactly is a financial plan?
A financial plan is exactly what it sounds like—a plan for one’s finances. The properly constructed financial plan should look like a budget on steroids with every needful thing accounted for and planned out.
Focus on These Areas
The main areas of finances that a person should want to plan for and develop goals for include various savings and reasons for saving such as saving for emergencies, future down payments on a home or car, savings for education, insurance costs, and, of course, devising a plan for a retirement fund. Planning for these savings means that a person will set goals concerning each area of savings and then make plans to accomplish those goals.
For example, if a person knows that they will need twenty thousand dollars for a down payment on a home they wish to purchase, then they can set the goal of saving twenty thousand dollars and create a plan on how to save that money. This financial plan concerning the purchasing of a new home can include things like saving a percentage of every paycheck to go towards the twenty thousand, cutting back other expenses and putting the saved money into the savings for the home, or other similar styles and methods for building a savings account.
Developing an all-encompassing financial plan, or the kind of financial plan that will help propel a family and secure their finances, will mean that a family make such plans as the above plan for buying a home with all areas of their finances. Once a master plan has been created, it should cover all areas of spending and saving that the family can reasonably devise.
With goals and plans to reach those goals in place, a person can create their financial plan and start down the road to finical success and security.